Spain and Finland sign new treaty to avoid double taxation and to fight tax fraud

Posted On: December 16, 2015

Given that the latest treaty was signed on 15 November 1967, the two countries felt it was appropriate to revise it in full.

The new treaty, signed on Tuesday by the Spanish Ambassador to Finland, María Jesús Figa, and the Finnish Minister for Finance, Alexander Stubb, seeks to enable tax treatment better suited to the circumstances of taxpayers that carry on economic activities at an international level and provide an updated framework of legal and fiscal certainty for those taxpayers affected. It also seeks to boost economic exchanges between the two countries and facilitate cooperation between the respective tax authorities in the performance of their functions.

With this aim in mind, the new treaty establishes, inter alia, the criteria relating to tax on real estate rentals, business profit, maritime and air transport, dividends, interest, royalties, capital gains, income from work, pensions, annuities and similar payments. The two countries committed to reducing the withholding rates for income on moveable goods, which will help foster investment between Spain and Finland.

The text also includes, among other things, the provisions relating to the methodology for eliminating double taxation and the exchange of information between the relevant authorities. Specifically, the article on the exchange of tax information to adapt it to the OECD standard has been updated. To the extent that the two States are members of the EU, Directive 2011/16 will be applied on administrative cooperation in relation to taxation, which will allow information to be exchanged both following a prior application, as well as in an automatic and spontaneous manner.

Spain is very active at an international level in its defence of the principles of transparency and the exchange of information. In recent years, it has reached many international agreements and signed treaties to help guarantee the exchange of information. Among the international treaties to avoid double taxation with provisions on the exchange of information, worthy of mention are those agreements in force signed with Canada, Uzbekistan, Oman, Nigeria, Senegal, the Dominican Republic, Cyprus, the United Kingdom and Argentina, as well as those signed with Andorra, the USA, India and Qatar and the agreement signed with Austria.

On another note, among the agreements on the exchange of information, noteworthy are those initialled with Monaco and Macao, and those signed recently with the British Crown Dependencies of Jersey, Guernsey and the Isle of Man.